The Central Bank of the United Arab Emirates (CBUAE) and the Bank Indonesia signed a memorandum of understanding (MoU) to promote cooperation in payment systems and digital financial innovation. Also, from December 07, 2021, CBUAE was expected to start publishing a new overnight index for UAE Dirham—namely, Dirham Overnight Index Average or DONIA. CBUAE expects that this index will serve as an anchor for banks in determining factors relevant to their daily fixing of interbank rates (EIBOR). CBUAE does not plan to discontinue EIBOR once DONIA is published, as DONIA and EIBOR will co-exist in the domestic markets. In yet another development, CBUAE and certain other authorities, including the Dubai Financial Services Authority (DFSA), jointly issued guidelines for financial institutions adopting enabling technologies.
The guidelines for enabling technologies set out cross-sectoral principles and best practices for financial institutions when adopting enabling technologies for the development or offering of innovative products and services. The enabling technologies include application programming interfaces, big data analytics and artificial intelligence, biometrics, cloud computing, and distributed ledger technology. The guidelines are applicable to all Institutions licensed and supervised by the supervisory authorities that are using, or intend to use, such enabling technologies. The guidelines aim to:
- provide Institutions with best practices on risk management in respect to enabling technologies
- encourage the safety and soundness of Institutions so that relevant risks arising from innovative business models and services are adequately managed and mitigated
- limit the systemic risks that could arise from the use of innovative technology, thus fostering transparency and financial stability
- provide guidance on how to manage the risks when adopting enabling technologies to deliver more efficient, secure, and robust solutions to customers, thus improving organizational efficiency and financial inclusion
- promote the growth and advancement of the UAE financial services sector and encourage adoption of Innovative Activities in the UAE while managing risks in a proportionate manner
- MoU with Indonesia (PDF)
- Announcement on DONIA (PDF)
- News Release on Guidelines (PDF)
- Guidelines for Enabling Technologies (PDF)
Keywords: Middle East and Africa, UAE, Banking, Regtech, Cloud Computing, Outsourcing Arrangements, API, Big Data, Blockchain, Artificial Intelligence, Guidelines, Enabling Technologies, DONIA, EIBOR, Benchmark Reforms, Derivatives, DFSA, CBUAE
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